sonetirot, thank you for your response.
"A lot of time, In-money call never exercise. There are a lot of reasons for different type of investors such as
1. The speculator who bought CALL option and never have enough cash to exercise it so he close the contract before day end and take cash. He just want wind fall profit if it does jump up in CALL price."
In such a case, the call buyer sells his calls and takes a profit, yes, but he sells his call to someone else, who would excercise. At schwab, they automatically exercise in the money options at expiration.
"2. The covered call option writer who bought the contract back at smaller premium then sell next month CALL option at higher premium. For this type of investor all they care is small decent percent of profit every month. They will close contract before day end."
Good point, especially if the writer still wants his shares at the end of the day. However, the call writer is still earning a lesser return than would be the case usually (when his sold calls expire worthless), and may even be taking a loss to save his shares, since in this case, the call writer must buy back the calls in order to save his shares. The price he would have to pay to buy back his calls would be more than he received in premiums initially, assuming the share price has increased, as is the case here. Either way, the writer may regret having sold the calls in the first place.
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